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Seller Carry Back Financing 2025: Why Seller Carry Backs Are Back
With interest rates rising and banks tightening lending, more investors are turning to seller carry back financing (also called seller financing).
Instead of relying on a bank:
- The seller acts as the lender
- The buyer makes payments directly to the seller
- Terms are negotiated between both parties
As Pace Morby (host of A&E’s Triple Digit Flip and leader in creative finance) says:
“When banks say no, sellers become the bank. It’s one of the most powerful strategies in real estate.”
What Is Seller Carry Back Financing?
Seller carry back is when the seller of a property “carries” the financing.
- Buyer pays a down payment
- Seller finances the remaining balance with a note and mortgage/deed of trust
- Buyer pays monthly until payoff or refinance
Example: House sells for $300,000. Buyer pays $30,000 down. Seller finances $270,000 at 6% interest over 15 years.
Real-Life Story: Tuscaloosa, AL Duplex
An investor in Tuscaloosa, Alabama found a duplex listed at $220,000.
- Investor only had $20,000 cash.
- Bank denied the loan due to DSCR (Debt Service Coverage Ratio).
- Seller agreed to carry $180,000 at 7% for 5 years, with a balloon.
The investor rented each unit for $950/month, covering payments and creating cash flow. Three years later, they refinanced into a conventional loan.
Without seller carry back, the deal would’ve died.
Seller Carry Back Financing 2025: Why Sellers Agree
- Steady Income → They collect interest instead of one lump sum.
- Tax Benefits → They spread capital gains over years.
- Faster Sale → They attract buyers who can’t get bank loans.
As Larry Goins, author of Getting Started in Real Estate Day Trading, explains:
“Seller financing creates buyers where none existed. It’s a tool to unlock deals.”
Seller Carry Back Financing 2025: Challenges & Risks
- Due-on-sale clauses: Some mortgages restrict seller financing.
- Default risk: Seller must foreclose if buyer stops paying.
- Negotiation complexity: Terms must be fair for both sides.
Our Solution: We structure seller carry back deals with proper legal documentation and even combine them with gap loans or equity share when needed.
Best Practices for Investors
- Offer a reasonable down payment (often 10–20%).
- Use an attorney or title company to draft the note and deed.
- Combine seller carry with other tools (wraps, sub-to, gap loans).
- Be transparent with sellers — education builds trust.
FAQs About Seller Carry Back Financing 2025
Q: Can seller carry back financing work on multifamily?
Yes. It’s common in small multifamily and even commercial deals.
Q: What’s the typical interest rate?
Usually slightly above market rates — in 2025, 6–9% is common.
Q: What happens if the buyer defaults?
The seller can foreclose, just like a bank would
Q: How can your company help?
We structure seller carry back financing, provide gap loans for down payments, and connect investors with sellers open to creative terms.
